Apco Reports Third-Quarter 2012 Results

November 08, 2012 07:30 AM Eastern Daylight Time

TULSA, Okla.--(BUSINESS WIRE)--Apco Oil and Gas International Inc. (NASDAQ:APAGF) today announced that
for the three and nine-month periods ended Sept. 30, 2012, it generated
unaudited net income attributable to Apco of $10.2 million and $33.0
million, or $0.35 and $1.12 per share, compared with net income of $6.1
million and $21.9 million for the same periods in 2011.

“While the political and business environment in Argentina remains
challenging, we are hopeful the situation will stabilize and the
government will allow companies to focus on investing and finding
hydrocarbons”

Net income improved quarter-to-quarter from increased operating revenues
due to higher average sales prices and increased volumes and greater
equity income from Argentine investment. These benefits were partially
offset by greater costs and operating expenses that included increases
in production and lifting costs, depreciation and exploration expense,
and higher income tax expense.

The increase in net income for the year-to-date period is also due
primarily to higher average oil sales prices and increased volumes,
greater equity income from Argentine investment, and other income. These
improvements over last year were partially offset by higher costs and
operating expenses that included an $8.9 million increase in exploration
expense compared with the first nine months of 2011. During 2012, Apco
incurred significant 3D seismic costs in its Sur Río Deseado property in
Argentina and in the Llanos 40 block in Colombia.

The benefits of higher sales prices and greater sales volumes resulted
in an increase in operating revenues of $8.8 million for the third
quarter and $24.2 million for the year-to-date period compared with the
same periods in 2011. The quarter and year-to-date periods also
benefited from initial sales revenues from Apco’s Colombian operations.

Total sales volumes applicable to Apco’s consolidated interest on a
barrel of oil equivalent (BOE) basis were 10 percent higher than
third-quarter 2011 and 4 percent higher than the first nine months of
2011.

Total costs and operating expenses for the quarter and the first nine
months increased by $5.3 million and $17.3 million, respectively,
primarily the result of higher production and lifting costs,
depreciation expense, exploration expense and higher taxes other than
income.

The benefits of higher average sales prices and increased volumes also
led to greater equity income from Argentine investment for the third
quarter and the first nine months of 2012 compared with the same periods
in 2011.

“Although the benefit is just starting because production and sales
deliveries from Colombia have yet to normalize, we are pleased to see
the results of our exploration activities in Colombia generating income
during the quarter,” said Ralph Hill, Apco’s chief executive officer.

“We are fortunate to have benefited from higher prices and pleased to
have accomplished increased volumes and their contributions to improved
operating results,” Hill added.

2012 Capital Program and Operational Update

During the first nine months of 2012, capital expenditures of $43
million were invested primarily in development drilling in Neuquén basin
properties and exploration drilling in Colombia.

In Argentina, development drilling in Apco’s core Neuquén basin
properties is on schedule, with results in line with expectations.

In Colombia, the company has drilled two exploration wells in the Llanos
32 block. The first of these – the Maniceño 1 well – was put into
production in July. At the end of the quarter, the well was producing at
a rate of 3,500 barrels of oil per day. A second exploration well in
Llanos 32 – the Samaria Norte 1 well – successfully tested oil and is
waiting on approval to be put on a long-term production test of the
Guadaloupe formation. Apco has a 20 percent working interest in the
Llanos 32 block.

In early October, Apco spud its first and only committed well on the
Turpial exploration block. Initial log interpretations are favorable,
and the well was cased and cemented for testing.

Also in Colombia, Apco completed the acquisition of 305 square
kilometers of 3D seismic over the Llanos 40 block during the year. The
data processing and interpretation phase is under way, with exploration
drilling expected to commence in 2013.

“Our development drilling in our core area in the Neuquén basin
continues to produce strong results. We are satisfied with our
exploration successes in Colombia and will soon commence exploration
drilling in our Sur Río Deseado block in Argentina,” said Thomas Bueno,
Apco’s chief operating officer.

“While the political and business environment in Argentina remains
challenging, we are hopeful the situation will stabilize and the
government will allow companies to focus on investing and finding
hydrocarbons,” Bueno added.

Apco Oil and Gas International Inc.

Summary of Earnings

(In Thousands of Dollars Except Per Share Amounts)

2012

2011

Three months ended Sept. 30

Operating revenue

34,966

26,170

Costs and operating expenses

27,552

22,207

Investment income

6,363

3,961

Net income attributable to Apco

10,231

6,076

Per share

0.35

0.21

2012

2011

Nine months ended Sept. 30

Operating revenue

98,009

73,829

Costs and operating expenses

75,827

58,491

Investment income

21,864

13,337

Net income attributable to Apco

32,987

21,935

Per share

1.12

0.75

About Apco Oil and Gas International Inc. (NASDAQ: APAGF)

Apco Oil and Gas International Inc. is an international oil and gas
exploration and production company with interests in eight oil and gas
concessions and two exploration permits in Argentina, and three
exploration and production contracts in Colombia. More information is
available at www.apcooilandgas.com.
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